In Australia, there are two types of financial advice, personal financial advice and general financial advice. There’s also factual information, which is not considered advice.
To provide personal financial advice or general financial advice in Australia, the adviser or business must act under an Australian Financial Services Licence (AFSL). You can follow our guide: How to check if someone is licenced financial adviser, or how to check if a finance company (e.g. brokerage firm) is licenced by the government.
What is personal financial advice?
Personal financial advice or personalised recommendations take into account your personal needs, goals or objectives.
For example, if a financial planner sits down with you, goes over your financial situation (“Oh, you’ve got a mortgage?”) and told you to buy shares (“Because you want to retire in 15 years…”), that would be considered personal financial advice. The advice is personalised because it has considered your situation. It’s also considered a goal.
In Australia, anyone who provides personalised financial advice MUST hold an Australian Financial Services Licence (AFSL) or work as an authorised representative of a licence holder. See our guide, the steps in financial planning.
Because financial planners tailor their advice to your situation, they are required to adhere to very strict rules. For example, they cannot give you any personalised advice until they have completed a risk profile and something called a ‘Fact Find’.
You can use our free tool to find a financial adviser.
What is general financial advice?
General financial advice in Australia does not take consider your personal situation, needs or objectives.
For example, if you receive stock recommendations online through a newsletter, chances are, you are receiving general advice.
In this example, you will note that the person giving you the stock advice (the newsletter’s author) does not consider how it affects you personally, nor do they tailor the advice to you (everyone gets the same email). They provide their opinion on the shares only, not if they’re right for you.
Take a moment and look at the bottom of any Rask website (like this one). What do you see?
General financial advice must always include a disclaimer that outlines the type of advice that is being given. The general financial advice disclaimer lays out what you are getting and tells you to consider speaking with a financial planner before acting on the general advice.
It might read something like this:
“This document contains general financial advice, issued by ABC Finance (AFSL: 123 456). It does not take into account your personal situation and goals; therefore, it may not be appropriate to your needs. You should consult a licensed professional before acting on the advice.”
Tip: you can use the AFSL number or company name to check the company’s is really licenced to give financial advice in Australia.
The facts versus general financial advice
Finally, we have factual information.
Factual information is a truthful statement or information that is objectively ascertainable. It does not include a recommendation or statement of opinion, just objective information.
(If you’re a content creator reading this, just know that even if you say ‘this is factual information’ that won’t stop the regulator because even a statement of fact can result in a consumer perceiving that you are offering an opinion. For example, if you put the fees of two super funds beside one another – even though the fees are ‘factual’, the way they’re displayed could lead the consumer to make a decision about which Super fund to choose.)
Examples of factual information include:
- The information found on this page
- Telling uncle’s mate the latest BHP share price (but that’s it)
- Someone describing the basic features of an insurance policy – but not selling it
- A bank teller explaining the fees and interest rates on a new term deposit – without telling them to use it
Are blogs, podcasts and social media considered financial advice?
Many blogs, social media accounts, YouTube channels or advertisements often provide general financial advice without knowing it.
While some social media channels might say “it’s only factual information”, it doesn’t matter what you disclaim, the warnings you put in place, or (truth be told) what you say. It can simply be how your audience perceives the information you are delivering.
For example, if a YouTube channel compares the features of two stocks, or two brokerage platforms, focusing on their key differences (which are found on their website), that could be considered financial advice even though the numbers were factually accurate.
Find a financial adviser
In summary, there are two major types of financial advice in Australia: personalised financial advice, and general financial advice. If you’re still confused, just try to remember that general financial advice should really be called general financial information.
Regardless, a personal advice provider (e.g. financial planner) or general advice provider (e.g. Rask) must be licensed.
If you’re stuck, use our free tool to get matched with a financial adviser.
